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Suppose that the world price for steel is below the U.S. domestic price, but the government requires that all steel used in the United States be domestically produced.
a.Use a diagram like the one below to show the gains and losses from such a policy.b.How could you estimate the net welfare loss (deadweight loss) from such a diagram?c.What response to such a policy would you expect from industries (like automobile producers) that use U.S. steel?d.What government revenues are generated by this policy?
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